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‘Don’t ban referral fees – but make agents declare their existence and value early on’, plea by conveyancers

MY DEPOSITS

Referral fees paid by conveyancers to estate agents should not be banned – but their existence and their value should be disclosed.

Property law regulator the Council for Licensed Conveyancers said that both agents and conveyancers should be required to reveal the fees early on, giving people enough time to shop around if they wished.

The organization warned that if there were a ban on referral fees, conveyancers would have to increase their marketing spend: “It would also destabilising the conveyancing market by forcing firms to rewrite their business models overnight.”

CLC also said it saw nothing wrong with conveyancers being allowed to act for both buyer and seller, with parties in a chain finding it easier to track progress online.

CLIC has made its points in its response to the Government’s call for evidence on the home buying and selling process.

CLC has also told the Government that improving home buying and selling does not need legislation, with technology changes already making improvements.

The organisation said that ‘transformational change” is within reach.

In its response, it also calls for more information to be made available when a property is being marketed.

Without mentioning Home Information Packs, the CLC said that making relevant information available at the point of marketing was a “reasonable ambition and would achieve transformational improvement in the process.”

On referral fees CLC said that currently conveyancers divulge them when confirming their instructions with the client.

CLC said this is too late.

It said: “At this stage, the client is unlikely to consider whether they wish to continue to instruct that conveyancer or seek another who has not been referred, because they will be focused on moving their transaction forward.

“If estate agents and other referrers were to be required to inform clients of the referral fee (that it will be paid and its value) when they first take instruction from the client, that client would then have time to shop around if they wished.

“This approach would be much more likely to allow the industry as a whole to evolve as consumer behaviour changed over time.

“Unlike a ban, it would allow consumers to rely on the advice of an informed player in the industry, taking into account the fee attached to that referral.”

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Source:: ‘Don’t ban referral fees – but make agents declare their existence and value early on’, plea by conveyancers